Should Canada and Mexico gain a competitive advantage from lax enforcement of their environmental and labor laws? The 1994 North American Free Trade Agreement says no, and two side agreements on workers' rights and environmental protection impose mild sanctions against violators. But what of other nations in Latin America anxious to sign free-trade pacts with the U.S.?
The U.S. Congress and Clinton Administration are at loggerheads over extending NAFTA by authorizing another round of free-trade negotiations with Latin America. Democrats, led by House Minority Leader Richard A. Gephardt (D-Mo.), want tough enforcement measures on labor and the environment written into all trade pacts. On May 27, Gephardt went a step further, demanding an end to China's trading privileges because of its human rights record. The GOP leadership and its business allies are opposed to such linkage. Dealing with environmental and labor issues in a trade agreement "is something that Republicans just can't commit to," says Senate Commerce Chairman John McCain (R-Ariz.).
It's something business should commit to, however. Before the U.S. extends free trade into rapidly growing economies in Latin America and Asia, Corporate America should get behind enforcement mechanisms on labor and the environment. It's simply the smart thing to do.
U.S. companies can only lose if foreign corporations and governments can despoil nature or exploit workers to gain an edge in the global marketplace. And because U.S. companies have some of the world's highest standards to meet, they ought to be lobbying hard for labor and environmental protection in future trade deals just to level the playing field.
Free-trade agreements already range far afield from agreements of the past that were usually aimed at simply lowering tariffs. Most tariffs have been drastically reduced or eliminated among World Trade Organization nations. Today's issues are investments, information flows, and copyright piracy and bribery. And as industrialized nations conclude more free-trade pacts with developing nations, ancillary agreements on matters from restricting commercial fishing methods that endanger dolphins to bans on child labor become more important. "Trade agreements affect income distribution, bargaining power of unions, and jobs, so international trade law will have to take these into greater account," says University of Maryland economist I.M. Destler.
"NO SWEAT." In fact, with little fuss, the U.S. and WTO have begun trying to help the developed world preserve such workers' rights as the ability to join unions and bargain collectively. Even the Helms-Burton law--so revered by Republican conservatives--requires that any post-Castro regime in Cuba can receive aid only by complying with guidelines in the code of the International Labor Organization.
Developing countries are getting the message. The ILO, international soccer organizations, and the U.S. government recently forced Pakistan to crack down on the use of child labor to make soccer balls. Savvy corporations, such as apparel manufacturer Liz Claiborne Inc., are requiring their overseas suppliers to limit work hours and overtime. Recent exposes of working conditions in some Central American clothing plants mean "consumers now want to know if they are buying clothing from sweatshops," says Liz Claiborne's vice-president and general counsel, Roberta Karp. At the urging of the White House, Karp is helping draft rules for a "no sweat" label to certify that imported clothes are not made by exploited workers.
NAFTA was a good start. But it only requires Canada and Mexico to comply with their own environmental and labor-rights standards. Future agreements with nations that lack such protections will have to establish basic standards. Free trade isn't free if one country can gain competitive advantage by sacrificing its environment and workforce.